Weather deterioration in India may increase sugar prices
The S&P Global Platts agency expects global sugar shortage in the 2019/20 agricultural season in the amount of 1.93 million tons. The season starts in October. Will sugar prices rise?
Let us note that according to this agency, based on the results of the 2018/19 season, a global sugar surplus in the amount of 5.55 million tons will be formed due to an increase in its production in India, Guatemala, El Salvador and Belize. Note that India is the world's largest sugar producer. It beat Brazil in the previous season. According to the India Meteorological Department, negative weather conditions for agriculture may be formed in India in the current year because of the Indian Ocean Dipole and El Nino natural phenomena. If this happens, then, the global sugar surplus may be less than the forecast of the S&P Global Platts. An additional factor for the possible price increase may be the sugar beet crop reduction in Ukraine by 5% to 261 thousand hectares according to forecasts of the Ministry of Agrarian Policy and Food of Ukraine or even to 230 thousand hectares according to forecasts of the independent producer association Ukrtsukor. Let us note that a number of independent agencies expect a significant reduction in sugar exports from EU countries.
On the daily timeframe, Sugar: D1 has been in a neutral trend since October of the last year and the lower boundary of the neutral trend is the 200-day moving average line. Now prices are edging up from there. A number of technical analysis indicators formed buy signals. The further price increase is possible in case of a reduction in global harvest.
Summary of technical analysis
Position Buy
Buy stop Above 13
Stop loss Below 12
The S&P Global Platts agency expects global sugar shortage in the 2019/20 agricultural season in the amount of 1.93 million tons. The season starts in October. Will sugar prices rise?
Let us note that according to this agency, based on the results of the 2018/19 season, a global sugar surplus in the amount of 5.55 million tons will be formed due to an increase in its production in India, Guatemala, El Salvador and Belize. Note that India is the world's largest sugar producer. It beat Brazil in the previous season. According to the India Meteorological Department, negative weather conditions for agriculture may be formed in India in the current year because of the Indian Ocean Dipole and El Nino natural phenomena. If this happens, then, the global sugar surplus may be less than the forecast of the S&P Global Platts. An additional factor for the possible price increase may be the sugar beet crop reduction in Ukraine by 5% to 261 thousand hectares according to forecasts of the Ministry of Agrarian Policy and Food of Ukraine or even to 230 thousand hectares according to forecasts of the independent producer association Ukrtsukor. Let us note that a number of independent agencies expect a significant reduction in sugar exports from EU countries.
On the daily timeframe, Sugar: D1 has been in a neutral trend since October of the last year and the lower boundary of the neutral trend is the 200-day moving average line. Now prices are edging up from there. A number of technical analysis indicators formed buy signals. The further price increase is possible in case of a reduction in global harvest.
- The Parabolic Indicator gives a bullish signal.
- The Bollinger bands have narrowed, which indicates low volatility. The lower Bollinger band is titled upward.
- The RSI indicator is above 50. No divergence.
- The MACD indicator gives a bullish signal.
Summary of technical analysis
Position Buy
Buy stop Above 13
Stop loss Below 12